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March 31, 2006
Ending The 527 End-Around

The Republicans in Congress have decided to tackle the end-around to campaign-finance reform that the 2004 election produced in the form of tax-exempt 527 organizations. While Congress and the White House signed into law the most profound curbs on political speech in a century in order to supposedly rid the political process of money, organizations like MoveOn took in millions from benefactors like George Soros with no oversight whatsoever. After having been caught unaware in 2004, the GOP wants to close that loophole for 2006 and 2008. The New York Times reports that the effort may come too late, as money has found other holes in the system to exploit:

To many Republicans, the liberal activist organization is a political boogeyman that they hope to chase off with new restrictions on so-called 527 groups.

But the pursuit may turn out to be fruitless. Like other major groups planning to inject themselves aggressively into the midterm elections through advertisements, voter drives and issue fights, has already figured out what it thinks is a better, and less controversial, way to spend its millions. Its 527 — named for a section of the tax code — is being put on ice.

"Our 527 is dormant," said Eli Pariser, executive director of He said his group would predominantly operate as a conventional political action committee, allowing it to more freely mix explicit political support and issue advocacy in a way that Mr. Pariser described as "squeaky clean." might be moving on from its 527, but Congress is not. Two years after 527's burst onto the political scene, gaining notoriety by raising unlimited amounts from private donors, Congressional Republicans are moving to rein in the groups — just in time for the November midterm elections. Leading Democrats are threatening a fight.

Instead of 527s, the new buzz number is 501(c). That's the tax designation for a brand of non-profit that can legally campaign for the election of specific candidates, and whose contributions fall outside of campaign regulation. While Congress plays whack-a-mole with 527s, the truth is that most people have abandoned that format due to existing restrictions on direct support for candidates. MoveOn had to split itself into two entities in 2004 to get around that problem, and this time around won't even bother with the 527 effort. In effect, the Republicans are thus far solving a problem that no longer substantially exists.

Once again, we can thank decades of Congressional action for this nonsense. Repeated attempts to "reform" the electoral process has resulted in a Byzantine labyrinth of legislation that creates so many artificial categories for the good old US greenback that even the lawyers have trouble keeping up with it. Instead of removing big money from the political process, they have guaranteed its further insinuation while drastically reducing the responsibility of candidates and political parties for its use. These independent 501(c)s can campaign with no boundaries of taste or accountability, and the causes and people they support can have no effect on their activities -- in fact, they must not be able to affect them, lest that prove illegal coordination. Donors with big checkbooks will send their money to these front organizations instead of the political campaigns but get the same benefit regardless.

If this sounds a lot like money laundering to you, it only proves you're paying attention.

Once again, and before we lose even more of our right to free political speech, Congress needs to abandon these ridiculous attempts to build a stick dam in the middle of a flood. All these laws do is employ lawyers by the hundreds or thousands, turn inexperienced candidates into criminals, and allow big-money donors to escape responsibility. We need to forego artificial contribution categories and allow unlimited contributions with full and immediate disclosure. The money will still be in play, but it will force candidates to assume responsibility for their existence and application. Voters will then have a true picture of the political arrangements between donors and their favored candidates.

It's far past time that we abandon our fantasy that money can be removed from the political process, or that it even should be divorced from it. Money only provides a tool for communicating messages. The money itself is not an evil, but the darkness and confusion of its application in our current system makes it so. Bring it into the sunlight; it's time to quit fearing it and treat it responsibly/

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Posted by Ed Morrissey at March 31, 2006 6:48 AM

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